Read Time: 4 minutes
If you are in the market to buy a home, you may have heard the term “seller concessions” during conversations with friends and family. Essentially, seller concessions are a type of negotiation in which the seller agrees to pay a portion of the buyer’s closing costs or other expenses related to the purchase of the home (i.e., repairs, home improvements, etc.). Depending on the market, concessions can be a powerful bargaining tool. Here’s what you need to know.
What are seller concessions?
Seller concessions are essentially a way for the seller to sweeten the deal for the buyer. Instead of lowering the home’s sale price, the seller agrees to pay for certain costs or expenses related to the purchase. These costs may include things like the buyers’ closing costs, fees, or even repairs that need to be made to the home before closing.
How much can a seller contribute?
The amount of seller concessions will depend on a few factors, including the loan type the buyer uses to purchase the home. Some loans may have caps on how much the seller can contribute. It is important to discuss this with your Loan Originator.
What can seller concessions cover?
As mentioned earlier, concessions can cover things like closing costs and repairs. In addition, they can be used to cover:
-
- Appraisal fees
- Inspection fees
- Title insurance
- Recording fees
What are the benefits of seller concessions for buyers?
For buyers, seller concessions can be a big help financially. Closing costs and other expenses related to buying a home can add up quickly, and having the seller agree to pay for some or all these costs can make the purchase more affordable. Additionally, if the home needs repairs or other work, the seller may agree to pay for these expenses as part of the seller’s concessions.
But keep in mind, not all sellers will offer or accept concessions. Depending on the current market and if there is a lot of competition for a particular home, your offer could be rejected if you request concessions.
What are the benefits of seller concessions for sellers?
While it may seem counterintuitive for a seller to agree to pay for the buyer’s expenses, there are benefits to seller concessions for sellers as well. By agreeing to pay for some or all the buyer’s costs, the seller can make their home more attractive to potential buyers. This can lead to a faster sale and may even result in a higher sale price for the home.
How do seller concessions impact the sale price of a home?
Seller concessions do not directly impact the sales price of a home, as they are separate from the sale price. However, if a seller agrees to pay for the buyer’s closing costs or other expenses, the buyer may be willing to pay more for the home overall, as they will be saving money on these other costs.
How can buyers negotiate seller concessions?
If you are a buyer interested in negotiating seller concessions, working with your real estate agent to make a strong offer that includes your desired concessions is important. Be sure to make your offer as appealing as possible to the seller and be prepared to be flexible in your negotiations.
Seller concessions can be a helpful tool for both buyers and sellers in a real estate transaction. If you are a homeowner considering selling your home, it’s worth exploring whether offering concessions could help make your home more attractive to potential buyers. If you are a buyer, working with your real estate agent to negotiate for seller concessions can help make your home purchase more affordable. Just be sure to discuss concessions with your Loan Originator early in your homebuying journey.
Equal Housing Opportunity. Axia Home Loans is a registered tradename of Axia Financial, LLC. NMLS 27830.